CHAPTER ONE

1.0   INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Tax is an important factor in economic planning and development of a nation and also an important agent of social change, (Ola 2000:109). Tax according to Agyei (2002:174) the transfer of resources from private sector to the public sector in order to accomplish some of the nations economic and social goals. Furthermore, tax is a compulsory levy imposed on the payer by a legal authority or recipient public authority. Throughout the history of mankind, the right to raise tax has been one of the principal features of political authority. Tax is an instrument of fiscal policy, which plays a leading role in every organized society irrespective of the political or constitutional structure. Once a society becomes stabilized, civilized or law abiding the function of government becomes enormous resulting in heavy expenditure and necessitating tax payment by its subjects.

For a developing country like Nigeria, the primary economic goal is to increase the rate of economic growth and hence the per capital income which will lead to higher standard of living

Three main method of financing economic expenditure in most developing economics include taxes and other current receipts such as the profit of public enterprises, loans and grants. Of these sources, tax is perhaps the most important since the level of government expenditure is to a great extent dependent on the

ability of the tax system to place the required revenue at the disposal of government. Hence, Samuelson (2004:92) wrote that “in deciding to tax people, the people are really deciding how resources needed for social wants shall be taken from all various families and from the enterprises they own and made available for the provision of social goals and services”. Again since market system proves inadequate for ensuring stable price and steady growth, tax has to be used to bring about employment, stable price and steady growth. In addition, tax is meant to ensure, at times, a transfer of resources from the hand of the private to public or government for investment, modification of patterns of investment and mitigating economic inequalities.

Allas, these aims are far from being achieved in Nigerian society. The tax system is failing in almost all the above respect. Therefore, there must be crucial problems militating against efficient and effective tax administration in Nigeria.

There have been discussions on the problems posed by the dwindling fortune in the oil economy. This problem is acute because of the undue reliance on federal government for the bulk of the operating revenue in the state. All the states of the federation are now required to intensify effort toward the internally generated revenue to make up allocation from the federation account. Unfortunately the problem engendered in the internally generated revenue is more acute in newly created states. Before being carved out, these states were doing fairly well with what they collected within their confines.

In Enugu state, the problem of inefficient tax collection is highly pronounced. Due to lack of fund the state been unable to fulfill its obligations to the citizenry. The present emphasis on rural development has subdued the state with the problems of socio-economic development of the rural communities. Beside political duties, it is expected to provide good roads, health services, primary and secondary education, good environmental sanitation among others, to her people. As a result of the government inability to meet with its obligations the people have resorted to self help projects in most communities.

Observation has shown that the number of self help projects in most communities outnumbers the government projects therein. These failures are attributed to the numerous problems militating against efficient tax collection in the state as shown by this project.

Inspite of the broad nature of taxes, the tax payers are usually on the look out for loopholes which they could exploit and less tax to the government. Besides the corrupt tax officials, evidence abound that there is high incidence of tax avoidance (refusing to pay tax entirely) and evasion (act by which the amount of tax payable is dishonestly reduced) in Enugu state.

As a result of the role and importance of tax as an instrument of fiscal policy, the vital sources of government revenue, taxation becomes an important area of study. But because of the failure of taxation to effectively collate resources, secure equitable income distribution and properly regulate the econo-colateral function of a good tax system and above all provide the government with the much needed revenue to meet its various obligations, it is strongly convinced that there must be some crucial problems militating against effective and efficient tax administration in Enugu state and Nigeria as a whole. Hence a study of problems of tax administration and collection with particular reference to Enugu state is hereby being undertaken to x-ray with a view of finding these problems, their degree of impediment, the likely prospect and proffering recommendations of actions that will ensure effective and efficient tax administration and collection mechanism in Enugu state in particular and Nigeria in general.

• STATEMENT OF PROBLEM

There have been heart provoking outcries by various state governments in Nigeria over their poor financial base. The situation is becoming even more compounded by the obvious dwindling feature of our oil economy. Moreover, inspite of the broadness and the comprehensive nature of our tax system, tax avoidance and evasion are on the increase. This ugly development has placed most state government in a situation where they cannot cope with their civic responsibilities to their citizen, hence a compelling need to put an end to this unwholesome circumstances through proper problem identification;

It has been a problem to understand the extent to which resources, human / material for the management of Enugu State Board of Internal Revenue. (ESBIR). The extent to which the objectives of the organizations are being achieved. Also, it is a problem to determine the relationship between the ignorance of tax benefits and the unwillingness of tax payers to pay their taxes and so fulfill their civic obligation. It is difficult to ascertain the extent to which ESBIR has realized its targets on priority areas of personal income tax administration.

• OBJECTIVE OF THE STUDY.

1. To ascertain the extent to which the resources (human / material) are adequate for the management of the organization (ESBIR).

2. To find out the extent to which the objectives of the organization (ESBIR) are being achieved in recent years.

3. To determine the relationship between Ignorance of tax benefits and the unwillingness of tax payers to fulfill their tax obligation.

4. To evaluate the ethical validity and the basis of personal Income tax assessment and collection in Enugu state

• RESEARCH QUESTION

Below are research questions to which the study would be based.

1. To what extent is the resources (human / material) adequate for the management of ESBIR (Enugu state board of internal revenue)?

2. To what extent have the objectives of the organization been achieved in recent past?

3. What is the relationship between the ignorance of tax benefits and the unwillingness of tax payers to fulfill their tax obligation?

4. To what extent has the board realized its targets on priority areas of personal income tax administration.

• SIGNIFICANCE OF THE STUDY.

This research work is being undertaken to identify the problems hindering personal income tax administration and collection in Enugu state. It is my hope that this study will help to correct the deficiency in the personal income tax generation machinery in Enugu state.

Again, there is practically no detailed study devoted to the problems of personal income tax collection in recent years. Therefore, the study will adequately fill up the gap. Thus, a research work that focuses on this topic is timely and very necessary in providing lasting solution to the incessant and unhealthy problem of waste of revenue through ineffective personal income tax administration and collection in Enugu state.

• SCOPE OF THE STUDY.

The topic of this thesis is “The problems of personal Income Tax Administration and collection in Nigeria with particular reference to Enugu State Board of Internal Revenue”.

DOWNLOAD COMPLETE WORK

DISCLAIMER: All project works, files and documents posted on this website, eProjectTopics.com are the property/copyright of their respective owners. They are for research reference/guidance purposes only and some of the works may be crowd-sourced. Please don’t submit someone’s work as your own to avoid plagiarism and its consequences. Use it as a reference/citation/guidance purpose only and not copy the work word for word (verbatim). The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own study. eProjectTopics.com is a repository of research works where works are uploaded for research guidance. Our aim of providing this work is to help you eradicate the stress of going from one school library to another in search of research materials. This is a legal service because all tertiary institutions permit their students to read previous works, projects, books, articles, journals or papers while developing their own works. This is where the need for literature review comes in. “What a good artist understands is that nothing comes from nowhere. The paid subscription on eProjectTopics.com is a means by which the website is maintained to support Open Education. If you see your work posted here by any means, and you want it to be removed/credited, please contact us with the web address link to the work. We will reply to and honour every request. Please notice it may take up to 24 – 48 hours to process your request.